Union Budget 2021 India: The common man is looking forward to this year’s Budget to improve cash flows and enable more consumption and savings for better sentiment.
An enhanced deduction from the present limit of Rs 5,000 for health check-up, deductions for expenditure on medical tests and treatment is a valid and genuine ask of the common man.
Union Budget 2021-22 Expectations of the Common Man: For the year that has now come to be known for the surprises and lessons it unleashed, the common man would undoubtedly look up to the Modi government and FM Nirmala Sitharaman for incentives, subsidies, tax cuts and other benefits to grapple with the woes of the Covid-19 pandemic. Further, the gap in affordability strengthens the expectations of a common man from the government.
Here are some of the key expectations of the common man from the Budget 2021.
1. Enhanced limits to catch up increasing medical costs
There is an increasing trend of health consciousness, be it mindful eating, health check-ups, and preventive treatments, which is eminent in the ongoing pandemic situation and the aftereffects it carries. An enhanced deduction from the present limit of Rs 5,000 for health check-up, deductions for expenditure on medical tests and treatment is hence a valid and genuine ask of the common man.
2. Relaxation in residential status norms
The scope of income taxable in India is based on the residential status which is determined based on the number of days of stay in India. “Due to restrictions on international air travel, an individual may have been stranded in India and it would be unfair if that stay is also considered to determine their residential status for financial 2020-21, or even beyond if such travel restrictions continue. While a circular was issued to ignore such days in determining residential status for financial 2019-20, a clarification is awaited for 2020-21. As this wasn’t foreseen before, the legislation may be amended to ignore those days of stay in India on account of travel restrictions,” says Tapati Ghose, Partner, Deloitte India.
3. Withdrawal or pre-closure of deposits and bonds
Withdrawals from provident fund attracts tax liability in the absence of continuous service period of five years. One cannot deny a higher attrition during this year. Hence, the condition of five years may be relaxed in cases of job loss during the pandemic.
4. Weighted deduction of expenditure
To boost consumption, a cash voucher scheme was introduced in lieu of leave travel concession (in view of the disruptions in travel and hospitality sectors). “However, the deduction is considered if the employee spends three times the prescribed amount. The government may consider providing a deduction for two times the expenditure incurred for specific purposes to make the scheme more attractive to individuals,” says Ghose.
5. Standard deduction for work from home
Work-from-home is the new normal these days and the salaried class will have to incur additional expenditure to meet communication and infrastructure requirements. Introduction of standard deduction for such expenditure would be a welcome relief.
6. Enhanced deduction for income from house property
On account of the pandemic, there is diminished demand for real estate and reduction in rent income. Further, a house owner with house property income would also be incurring higher maintenance, in excess of the 30% standard deduction allowed. In order to support the property owners in these difficult times, the standard deduction may be increased appropriately at least for the next two years.
7. Rate cuts
The Budget 2020 introduced a simplified tax regime with decreased slab rates, but came with conditions. “Individuals would have to forego exemptions and deductions to enjoy this benefit. In order to extend the benefit of lower tax rates to a larger section of individuals, to improve the cash flow issues, the government may consider allowing some of the exemptions and deductions under the new tax regime,” informs Ghose.
It may be noted that despite the numerous reliefs that have been provided during the year on account of the pandemic, most of these do not directly benefit the common man. The common man is hence looking forward to this year’s Budget to improve cash flows and enable more consumption and savings for better sentiment.